Does the Collateral Assignment of Lease specify any financial thresholds related to the Assignor's obligations to Rayyan Pizza Franchise LLC, operating as Aw?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
At our option, we may require that the lease: (i) have a term, with initial and renewal terms, at least equal to the initial term of this Agreement; (ii) be collaterally assigned to us (with the consent of the lessor, if required), by execution of the Collateral Assignment of Lease attached hereto as Exhibit 3 (the assignment may be exercised only upon your default under the lease or this Agreement or the expiration or termination of this Agreement); (iii) provides that the lessor shall give written notice to us (concurrently with you) of any default by you under the lease, and will give us an additional fifteen (15) days to cure any default not cured by you during the cure period and assign the lease to us if defaults are cured by us; (iv) permits the use on the Premises of all signs required by the us for Papa Ray's Pizza Restaurants, subject to applicable local laws, codes and ordinances; (v) provides that on expiration or termination of your Franchise Agreement, we may enter the leased
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Aw discusses the Collateral Assignment of Lease in the context of the franchise agreement. Specifically, Aw may require the franchisee to collaterally assign the lease to them, with the lessor's consent if needed. This assignment becomes effective upon the franchisee's default under the lease or the franchise agreement, or upon the expiration or termination of the agreement. The FDD does not specify any financial thresholds related to the assignor's obligations to Rayyan Pizza Franchise LLC in the Collateral Assignment of Lease.
However, the lease agreement may contain certain provisions that Aw requires, such as a term equal to the franchise agreement, the lessor providing written notice of any default by the franchisee, the ability to cure defaults, permission to use required signs, the right to remove signs upon expiration or termination, the use of the premises only for an Aw restaurant, and a restriction on leasing other premises to competing businesses in the same shopping center. These stipulations ensure Aw's control over the premises and protect its brand identity.
While the FDD mentions the possibility of Aw requiring the franchisee to enter into an agreement ensuring that any payment obligations of the assignee to the franchisee are subordinate to the assignee's ongoing obligations to Aw, it does not specify financial thresholds in the context of the Collateral Assignment of Lease. A prospective franchisee should carefully review the lease agreement and the Collateral Assignment of Lease to understand the full scope of their obligations and the conditions under which the lease may be assigned to Aw.